Investors rate Ten's latest a poor show

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Steaming the coffee shop in Ten's Neighbours goes up in
flames, helping the network to light a fire under its ratings in
its core 16-to-39 demographic.

The Ten Network has been under fire this week for chequebook
journalism and the antics of its Big Brother housemates.
Yesterday, shareholders joined the fray, pushing its stock down
more than 5 per cent after the network reported a lacklustre
third-quarter result.

Fund managers said strong competition and the costs associated
with a few dud programs, such as The X Factor and the local
version of Queer Eye for the Straight Guy resulted in a
smaller-than-expected 3.5 per cent increase in quarterly earnings
to $61.3 million from a year ago. Ten released the results for the
three months ended May 31 in line with its major shareholder,
Canadian media group CanWest.

Ten executive chairman Nick Falloon praised the result, which
came against the backdrop of intense competition and a weak
advertising market.

He said Ten was "back on top" in its core 16-to-39 demographic,
helped by programs such as Neighbours, Rove Live and
the US teen drama The OC.

"For Network Ten to achieve nearly 8 per cent revenue growth in
a tougher advertising market and in the midst of a fierce ratings
battle is a fantastic achievement," Mr Falloon said.

Still, shares in Ten dropped 22c to $3.98.

"It's a competitive marketplace now and that's been played out
in the Ten result," 452 Capital's Peter Morgan said yesterday. "I
think costs were higher than the market expected but that's largely
because of The X Factor, which is not going to be there next
year."

Mr Morgan also pointed out that before yesterday the stock had
climbed almost 14 per cent in the past month. The rise followed WIN
Corporation's purchase of a 5 per cent stake, which triggered
speculation about changes in media ownership.

Ten was also forced to apologise for any offence caused in its
late-night program Big Brother Uncut regarding the attitude
of some of the male housemates towards women.

Earlier this week, media watchers were up in arms about the
estimated $400,000 paid for an exclusive interview with returned
Iraq hostage Douglas Wood.

Analysts are concerned the payment is a sign Ten's tight rein on
costs, which has made it the country's most profitable network, is
slipping. But Ten said yesterday it still had the lowest cost base
of all the commercial networks and was comfortable with analyst
forecasts of an 8 per cent increase in costs for the full year.

Outgoing television boss John McAlpine said he had seen
promising new programs at the recent screenings in the US. Local
programs in the second half of the year such as Australian
Idol, the AFL finals and a new reality show, Australian
Princess, would also boost ratings.

Ten's outdoor ad company, Eye Corp, boosted earnings by 46 per
cent in the quarter but the company warned earnings were seasonal
and would probably slow toward the end of the year.

Some brokers said yesterday they may look to downgrade their
full-year earnings forecasts.

Goldman Sachs JBWere's analysts forecast a pre-tax profit of
$328 million but said fourth-quarter earnings would need to jump 20
per cent - "a big ask".